Note 7 - Inventories

3 Months Ended

Mar. 31, 2013

Inventory Disclosure [Text Block]

7.        Inventories

a. Inventories Owned

Inventories owned consisted of the following at:

	March 31, 2013
	California		Southwest		Southeast		Total
	(Dollars in thousands)
Land and land under development	$	752,155	$	376,589	$	322,218	$	1,450,962
Homes completed and under construction		267,433		109,036		118,641		495,110
Model homes		67,697		18,766		17,167		103,630
Total inventories owned	$	1,087,285	$	504,391	$	458,026	$	2,049,702

	December 31, 2012
	California		Southwest		Southeast		Total
	(Dollars in thousands)
Land and land under development	$	778,419	$	352,705	$	313,037	$	1,444,161
Homes completed and under construction		240,236		93,265		93,695		427,196
Model homes		67,504		15,231		17,326		100,061
Total inventories owned	$	1,086,159	$	461,201	$	424,058	$	1,971,418

In accordance with ASC Topic 360, Property, Plant, and Equipment (“ASC 360”), we record impairment losses on inventories when events and circumstances indicate that they may be impaired, and the future undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts.  Inventories that are determined to be impaired are written down to their estimated fair value.  We calculate the fair value of a project under a land residual value analysis and in certain cases in conjunction with a discounted cash flow analysis.  During the three months ended March 31, 2013 and 2012, the total number of projects included in inventories-owned and reviewed for impairment were 293 and 261, respectively.  Based on the impairment review, we did not record any inventory impairments during the three months ended March 31, 2013 and 2012.

b. Inventories Not Owned

Inventories not owned consisted of the following at:

	March 31, 2013		December 31, 2012
	(Dollars in thousands)
Land purchase and lot option deposits	$	26,556	$	23,803
Other lot option contracts, net of deposits		45,463		47,492
Total inventories not owned	$	72,019	$	71,295

Under ASC Topic 810, Consolidation (“ASC 810”), a non-refundable deposit paid to an entity is deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur.  Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property.  In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown.  Such costs are classified as inventories owned, which we would have to absorb should we not exercise the option.  Therefore, whenever we enter into a land option or purchase contract with an entity and make a non-refundable deposit, a variable interest entity (“VIE”) may have been created.  As of March 31, 2013 and 2012, we were not required to consolidate any VIEs related to land option or purchase contracts.  In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.  Other lot option contracts noted in the table above represent specific performance obligations where the land option contract contains a binding obligation requiring us to complete the lot purchases.